Cash emergency LG Energy with Kona battery… Will we agree with SK? Mansu Choi’s electric vehicle battery inside

LGEnergy solution 11Work SKEven after winning a complete victory in the’battery lawsuit’ against Innovation, the company is burning in a series of fire accidents. This is because the recall ante issue can hold back in a situation where it must be successful in the IPO box office this year. Some observers say that LG, desperate to secure cash, will more aggressively reach an agreement with SK.

According to the industry on the 18th, the Ministry of Land, Infrastructure and Transport and the Automobile Safety Research Institute 15The cause of the fire of Hyundai Motor’s’Kona Electric’ that occurred one after another will be announced soon. The Ministry of Land, Infrastructure and Transport is also planning to look into the fire of Hyundai Motor’s electric bus’Electic City’ that occurred in Changwon, Gyeongnam on the 15th. Like Kona, this bus is equipped with a battery from LG Energy Solutions.

It is known that Hyundai Motor Company and LG Energy Solutions are considering replacing all Kona batteries. LG Energy Solution manufactures battery cells, and Hyundai Motor Group manufactures battery packs and battery management systems (BMS). The responsibility and cost-sharing ratio of the two companies will also vary depending on which stage of the fire is caused.

Battery replacement target 2017A total of 70,000 vehicles were produced from September 2008 to March last year.7000Reached women’s college. The replacement cost is estimated to exceed 1 trillion won. Hyundai Motor Company LGThis cost, which Energy Solutions will discuss and share, is expected to be reflected in the management performance of the two companies in the first quarter of this year. An official at LG Energy Solutions said, “Nothing has been decided because the cause of the fire has not yet been clearly identified.”

LG Chem last year(941,000 +0.21%)LG Energy Solutions, which was spun off from, receives an independent report card for the first time this year. The profitability of the battery business will be clearly revealed.

In a situation where the first button needs to be fastened, there may be a situation where a provision of hundreds of billions of won must be set along with the announcement of the cause of the fire in the nose. The provision is set as a liability by estimating the amount expected to occur in the future due to the exchange or refund of the sold product, based on past experience.

The problem is that LG Energy Solutions is facing an IPO this year. The company is anxious about whether the deterioration of earnings due to the setting of provisions will bring a cold water to the box office.

An official from the investment banking (IB) industry said, “It is true that the company is in an emergency due to the Kona problem.” Said.

In this situation, SK innovation(296,000 0.00%)LG Energy Solution can greatly ease the worries if you receive 2~3 trillion won in cash as much as you want.

SK is also in a desperate need of an agreement. The U.S. International Trade Commission (ITC) has granted a grace period of two and four years, respectively, for the volume of Volkswagen and Ford batteries that have already been ordered. Uncertainties must also be resolved for additional orders in the future.

SK has high expectations for the U.S. president’s veto exercise, but industry analysis is that the possibility is slim. If an agreement cannot be reached within 60 days of the ruling and proceeds to the appeal process, the two companies will have to inject hundreds of billions of dollars in litigation costs again and continue the tedious legal battle for many years.

LGThe energy solution side said the later the agreement, the greater the amount of compensation. SKHe warned that innovation is more damaging.

An industry insider said, “Since both companies agree that the agreement is the best, we will be able to reach an agreement sooner than expected,” he said. It is known that LG Energy Solutions is sticking to 2~3 trillion won and SK Innovation 1 trillion won or less as settlement funds.

Reporter Mansoo Choi [email protected]